Limited Rationality and Strategic Complements: The Implications for Macroeconomics

John Haltiwanger and Michael Waldman

The Quarterly Journal of Economics, 1989, vol. 104, issue 3, 463-483

Abstract: This paper considers the implications of heterogeneity in information-processing abilities for macroeconomic models that exhibit "strategic complements." The latter is the same concept that has received much attention in the recent macro literature under the headings Keynesian coordination problems and positive trading externalities. We consider environments in which agents vary in terms of their ability to form expectations, and ask whether it is the "sophisticated" agents or the "naive" agents who have a disproportionately large effect on macroeconomic equilibrium. We find that if macroeconomic interaction exhibits strategic complementarity, then it is the naive agents who have a disproportionate impact.

Date: 1989
References: Add references at CitEc
Citations: View citations in EconPapers (104)

Downloads: (external link)
http://hdl.handle.net/10.2307/2937806 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:qjecon:v:104:y:1989:i:3:p:463-483.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().